Venmo launches GenZ cash account competitor; $2B AUA marketplace Zoe Financial goes deeper on wealthtech
Lex Sokolin
Managing Partner @Generative Ventures | ex Consensys Chief Economist & CMO | Fintech, AI, Web3
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Digital Investment & Banking Short Takes
PAYTECH:?Venmo debuts Teen Accounts?(link?here)
Payments firm Venmo announced a Teen Account product, entering competition for the GenZ consumer. They join several startup creating teen-focused financial products like?Step, which raised a $100m Series C in April 2021, and?GoHenry, which raised a $55MM Series B in October 2022. Beginning in June 2023, Venmo will allow users to create a connected Venmo account for their kids, which comes with its own debit card.
The Venmo Teen account offers most of the classic built-for-teen features, including a separate balance, the ability to send and receive money, and direct deposits. Parents will be able to view transaction history and manage settings like PIN, locking / unlocking the card, reviewing the friends list, and blocking users. Compared to peer services, crypto payments, savings accounts, and budgeting tools are still missing.
Banking is not usually targeted at younger clients, seeing them more as a top-of-funnel acquisition strategy for assets over time, rather than individuals with particular behavioral and spending habits. Recent years have seen venture capital directed into companies that addresses this segment with targeted financial offerings. For GenZ, there is an emphasis on building money management habits, as well as distribution through influencers.?
Further, Venmo is not a bank but a nonbank money transmitter under state and federal law in the US. For most people, a Venmo account feels like a traditional bank account, allowing them to perform many basic tasks — deposits, payments, and investments — through a simple interface. To get deeper share of wallet and profitability, lending and a banking license are likely necessary. However, as a mobile distribution footprint for cash accounts, Venmo can be fast and clever about reaching new audiences.
Last, this brings up the classic VC-to-startup challenge — interrupting a well-rehearsed pitch, an investor might say “is this a product or a feature?” or “what is keeping Venmo from doing this and putting you out of business?” The answer is a race against time. Can someone like Step grow fast enough targeting their niche, before the incumber copies their feature? At one point Venmo was that start-up. Or perhaps Venmo is the laggard in the context of its more popular competitor CashApp, now trying to regain cultural relevance.
?? Related Coverage ??
DIGITAL INVESTING:?$2B Wealth Management Platform Zoe Financial Partners with BridgeFT API for Data And Infrastructure (link?here)
Zoe Financial is a digital marketplace serving as matchmaker between high net worth individuals and financial advisors.?As of 2023, it has ~$2B in assets under administration (AUA), and the 4,000 advisors using its platform represent approximately ~$800B in AUM.?The company was founded in 2018 and is backed by Softbank, and appears to want to go deeper into the technology stack. Zoe is working with BridgeFT, a multi-custodial wealthtech API offering, to power its own platform for advisors.
On the marketplace, users take a survey, provide their location, and answer questions regarding financial goals. Zoe then produces a list of the?top “vetted” advisors. Likely they get a referral fee for the effort.?Earlier this year, Zoe Financial also launched its own RIA, which puts it into position to compete with the advisors to whom it would normally refer business. But owning the RIA is a much more profitable proposition.
The integration with BridgeFT will likely accelerate their own internal advisor software build, as well as creating tooling for firms with whom they partner (e.g., net worth statements sent into CRMs).
Digital channels are great at lead generation, but for actual services provision, talking to a real person is still preferred —?according to a report by Simon Kucher, 63% of respondents consider human interaction the best method for receiving financial advice.?This has led to the proliferation of the “hybrid model”, combining digital and traditional services.
The global wealth management software market size is around $4B, making it a reasonably large prize. Among investments focused on the client-advisor experience,?over 50% are being allocated to CRM and financial planning?tools, highlighting the importance of having a modern digital platform.?Data gathering, client onboarding, portfolio reporting, and fee billing slow things down with manual process.
Despite more than a decade of attempts to digitize these processes, investments are still pouring into the space. Multi-billion dollar companies like Envestnet and FNZ *should* be sufficient at solving the problem. But it is almost as if there are structural, or perhaps generational, barriers preventing the success of the model.
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Podcast Conversation:?The success of crypto payment processing in eCommerce, with TripleA CEO Eric Barbier?(link?here)
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Curated Updates
Here are the rest of the updates hitting our radar.
Digital Investment Management and Capital Markets
Digital Banking and Payments
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Helping you make sense of going Cashless | Best-selling author of "Cashless" and "Innovation Lab Excellence" | Consultant | Speaker | Top media source on China's CBDC, the digital yuan | China AI and tech
1 年Zoe sounds fishy to me, I'd take a robot over this..... "users take a survey, provide their location, and answer questions regarding financial goals. Zoe then produces a list of the top “vetted” advisors." Not sure if this is the future of financial advising.
Master Future Tech (AI, Web3, VR) with Ethics| CEO & Founder, Top 100 Women of the Future | Award winning Fintech and Future Tech Influencer| Educator| Keynote Speaker | Advisor| (ex-UBS, Axa C-Level Executive)
1 年Given the big wealth transfer expected an excellent move- thanks Lex Sokolin!
Top Global Fintech & Tech Influencer ? Trusted by Finserv & Tech Global ? Content & Influencer Services ? Advisory for Digital Transformation ? Speaking ? [email protected]
1 年Really enjoyed the #wealthTech coverage Lex Sokolin. And even though there are so many WealthTech services, there are several challenges - from the average age of financial advisors all the way to integration challenges. Rating connectivity in WealthTech - with Craig Iskowitz - covers this topic https://youtu.be/ftVvl7BoyA0
Realtor Associate @ Next Trend Realty LLC | HAR REALTOR, IRS Tax Preparer
1 年Thanks for Posting.
Managing Partner @Generative Ventures | ex Consensys Chief Economist & CMO | Fintech, AI, Web3
1 年For the full newsletter, see here https://lex.substack.com/p/fintech-venmo-launches-genz-cash CC Spiros Margaris Efi Pylarinou Urs Bolt Richard Turrin Mohamed Roushdy, MBA Theodora Lau Props Laurence Smith Matthew James Low Farhad H. Daniel Marques Daniella S.